Last Updated on 12/12/2020 by NM Staff
Bought a car with the help of a car loan and stuck with the liabilities of having to pay the EMI? Bored with your existing car and wish to buy a different one but unable to clear the outstanding loan amount? Availed a car loan with a lender only to find out that another lender is offering better interest rates? If any of these questions are bothering you, we have one answer for you – car loan transfer.
What is a car loan transfer?
The facility offered by a car loan lender to the borrower to transfer the car loan to another person or lender is known as a car loan transfer. Transferring a car loan can relieve you of your financial liabilities but this comes with a fee. Hence, you should opt for a car loan transfer only if it is financially viable for you. A car loan transfer can be done in two ways. The first way involves making modifications to the existing lender while in the second method, a new lender is sought. Let us individually understand how both these ways of car loan transfer work.
Modification of the existing lender
In this type of car loan transfer, you will need to intimate your existing lender that you will be selling the car and the rest of the loan amount will be repaid by the new owner of the car. Your existing lender will assess the financial health of the new car owner before approving the car loan transfer. This way of car loan transfer will cost you less penalty but ensure that the person you are selling the car to is creditworthy to pass the check done by the lender. Once the lender approves the borrower, he/she will need to submit the necessary documents such as identity proof, proof of residence, and income proof along with the loan transfer request form, and the outstanding loan will be passed on to him/her.
Seeking a new lender
When a car loan transfer is done by seeking a new lender, the new lender will clear off your remaining debt by paying it off and issue a new loan to the new borrower. However, in the process, your credit score may get lowered and you may have to pay a higher penalty. For the new borrower, it will be beneficial as the remaining sum is lesser than the initial principal and consequently, will result in him/her having to make lower monthly payments, lower rates of interest, etc.
Things to bear in mind while doing a car loan transfer
- When doing a car loan transfer, ensure that the registration of the car is changed to the new owner’s name along with the transfer of car loan documents. To do the same, you will need to visit the RTO office and submit the relevant bank documents bearing the details of the new borrower. Upon placing a request with the RTO, the ownership of the vehicle will be transferred to the new owner. A background verification will be carried out by the RTO before any changes are made to the registration details. The RTO will charge some fee for the change in registration and the complete process may take about two weeks.
- Make sure that the new owner of your vehicle is compliant to the insurance requirements. You will need to inform your car insurer about the car loan transfer. The insurer will then brief you on the T&Cs (Terms & Conditions) related to the transfer. The insurance agency will ask you to present the bank documents before it can make the necessary changes.
- Do not approach your car insurer or the RTO office until the loan transfer request has been approved by the lender and the necessary documents have been issued. Otherwise, you may be held liable for any damage caused to your car during the loan transfer process.
- Before carrying out the car loan transfer, ensure that you are aware of the charges associated with it. The charges will depend on the remaining loan amount and the tenure of the loan. The details of the charges should be discussed with the new borrower so that there are no surprises later.
Car loan transfer is a great way to relieve yourself from the liability of paying EMIs at a time when you are facing a financial crunch. Also, if you are someone who likes to upgrade your car from time to time, you can sell your existing car, transfer the car loan to a new owner, and avail a fresh car loan to buy a brand new car.
How to apply for a car loan online?
Applying for a car loan has been made very easy, quick, and convenient by Bank Bazaar. You just need to visit its official website, click on the ‘Car Loans’ section under the ‘Loans’ tab, and you’re good to go. You will have an option to choose from a list of different lenders after comparing the benefits offered by each of them. You can also avail car loans for used or per-owned cars through Bank Bazaar.
Additionally, you can approach the banks directly by visiting the nearest branch office or the official websites, to avail a car loan.
What is the eligibility to avail a car loan?
The eligibility criteria for a car loan varies from bank to bank but the basic requirements that one needs to fulfil are:
- The borrower must be an Indian citizen
- Salaried individuals must be at least 21 years of age, must be employed continuously for at least 1 year, and should be earning at least Rs.2.4 lakh per annum
- Self-employed individuals need to be at least 18 years of age, should have a net annual income of at least Rs.1.8 lakh, and should be working in the same line of business for at least 3 years
- A telephone or postpaid mobile connection is needed
- Maximum age at maturity should be between 70 years and 75 years (depending on whether the individual is salaried or self-employed)
Car loans can make your dream of owning a car a reality and with the car loan process being made simple, quick, and convenient there is no reason why you should keep your dream waiting. Avail a car loan now and drive your dream to reality.